Project Summary The goal of this SBIR Phase I project is to develop a novel, robust method that combines fungal artificial chromosomes (FACs) with next-generation sequencing (NGS) technologies and an advanced fungal heterologous host to allow the direct capture and heterologous expression of a complete set of large intact biosynthetic gene clusters (BGCs) of fungal natural products (NPs) from un-sequenced fungi. In Phase I we will focus on the capture and heterologous expression of the BGCs of two un-sequenced extremophilic fungi that produce a novel, selective family of antibiotics, the berkelylactones, when grown in co-culture. The berkeleylactones selectively target methicillin/erythromycin-resistant Staphylococcus aureus (MRSA). As an initial milestone, the capture of these gene clusters and expression in a single heterologous host will facilitate production of these important new antibiotics. Fungal natural products are important sources of antimicrobial agents, anticancer compounds, and other categories of drugs in clinical use. However, high through-put sequencing has shown that only about 10% of fungal NP-BGCs are expressed under laboratory conditions. Therefore, revolutionary technologies and tools are urgently needed to more effectively dissect the biosynthesis of fungal NPs in order to more efficiently access novel fungal metabolites as potential pharmaceutical agents. Recently, we developed a novel FAC method that allows the direct capture and heterologous expression of an entire set of large intact NP-BGCs from a sequenced fungus efficiently. We have also shown that FAC or shuttle bacterial artificial chromosome (BAC) technology combined with FAC/BAC pooling and NGS index-sequencing can achieve 100kb-single molecule sequencing and assembling, which will further improve fungal NP discovery from un-sequenced fungi 100~1000 fold. Hence, we propose this SBIR Phase I project to examine the feasibility of employing this new strategy to rapidly access the large intact NP-BGCs of un-sequenced extremophilic fungi from an extremely unique environment. Since this project is designed to overcome a barrier to implementing FAC- NGS in un-sequenced fungi for efficient NP discovery for anti-MRSA antibiotics, anti-cancer compounds and more, if successful, it will have a profound impact on filamentous fungi for NP- drug discovery. More broadly, our novel breakthrough can initiate a critical paradigm shift in large- scale NP-drug discovery, shaping the landscape of our nation?s healthcare system as it tackles the major public health issues, including infectious diseases, cancers, and many other diseases and pathologies.